The so-called Netflix tax is now in but retailers want the same thing on low-value goods purchased from offshore websites.
New legislation requiring international firms to charge GST when selling digital services to New Zealanders comes into force on Saturday.
Retail NZ and Booksellers NZ say this is good news for big tech firms like Spark and Sky TV but the Government is missing the opportunity to level the playing field for retailers by taxing goods purchased by New Zealanders offshore.
"The top 20 international shopping websites account for two-thirds of all foreign online sales to New Zealanders. It would be straightforward for the Government to require these businesses to collect GST on the sale of goods, just like it is doing for services," says Greg Harford, Retail NZ's general manager for public affairs.
The Government is missing out on between $200 million and $500 million in GST revenue from low-value goods, he says.
The Australian government has announced it will implement this solution from next year, and there is no reason why New Zealand should not be moving on this, Mr Harford says.
Booksellers New Zealand chief executive Lincoln Gould says the new rules create an absurdity, allowing big foreign shopping websites to continue to get away without paying their rightful share of GST.
"Given that the scene has been set with digital services, the continued government inaction on low value goods is deeply disappointing. We are calling for urgent government action to close the tax loophole," says Mr Gould.
One of the biggest proponents for the law change on digital services was Spark, which said its streaming service was competing on an uneven playing field with Netflix because it didn't have to pay GST.